Oil at 2 1/2-year high on expectations of dwindling stockpiles

Oil climbed to the highest level in two and a half years on expectations a U.S. government report will register the longest decline in crude stockpiles since the summer driving season.

Futures rose as much as 1.6 percent in New York, topping $61 a barrel. Oil stored in U.S. tanks and terminals probably dropped for a seventh straight week, according to a survey of analysts. Prices also have been buoyed by almost a week of violent protests in Iran that the nation's Revolutionary Guard Corps on Wednesday said had been brought to heel.

"The fundamental backdrop right now is stronger than we've seen in recent memory," said Michael Tran, commodities strategist with RBC Capital Markets in New York. "Prices will likely be able to hang in there this year, due to tightening stockpiles."

Oil has risen for two years running as the Organization of Petroleum Exporting Countries and allied producers including Russia trimmed supplies to reduce a global glut. Prices will probably trade between $40 and $60 a barrel this year, penned in by rising U.S. shale production, declining but still ample spare supplies and slipping discipline among OPEC members, according to Moody's Investors Service.

"The U.S. shale-OPEC tug of war will simultaneously cap upside price potential and downside risks," said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

West Texas Intermediate for February delivery rose 78 cents to $61.15 a barrel at 10:12 a.m. on the New York Mercantile Exchange. In earlier trading, the contract touched $61.35, the highest intraday price since June 2015.

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Brent for March settlement rose 64 cents to $67.21 on the London-based ICE Futures Europe exchange after losing 30 cents on Tuesday. The global benchmark crude traded at a premium of $6.02 to March WTI.

Oil-market news:

OPEC member Iraq exported a record 3.535 million barrels a day in December, the oil ministry said in a statement. Oil prices will continue to recover in 2018 as demand beats growth from U.S.